ECONOMICS
CONSUMERS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
As income rises, consumers buy more of all goods
|
|
|
Marginal utility is always increasing
|
|
|
Consumers do not consider the opportunity costs of purchases
|
|
|
Consumers try to maximize their utility
|
Detailed explanation-1: -Consumer choice theory is based on the assumption that the consumer fully understands his or her own preferences, allowing for a simple but accurate comparison between any two bundles of good presented.
Detailed explanation-2: -Assumptions concerning consumer behaviour: There needs and wants are greater than their income. Consumers seek to get maximum utility/satisfaction when buying goods. Consumers will act rationally ie. If they see two identical goods in two different shops, they will buy the cheaper of the two goods.
Detailed explanation-3: -The theory of consumer behavior assumes that consumers attempt to maximize: total utility. A consumer’s demand curve for a product is downsloping because: marginal utility diminishes as more of a product is consumed.
Detailed explanation-4: -What is a key assumption of rational consumer choice theory? Consumers leave some of their budget unspent. Consumers spend their money on the cheapest goods.